What is Medicare and how will it work? What will it cover? Though these may seem like simple questions, the answer is complex. The idea here is to simplify those questions so you can make an informed decision that is right for you.
Medicare is a national health insurance program in the US for people 65 and older. It is also for people with certain disabilities or end-stage kidney failure. This program is divided into various parts, and it’s important to learn how these fit together. We will explain those parts in the following paragraphs below.
What is Medicare?
It is a national health insurance program for older individuals and people who are disabled here in the U.S. In July of 1965, President Lyndon B. Johnson signed a Medicare bill into law so individuals 65 and older could get the healthcare coverage they need from a national program.
Initially, it only covered Part A and Part B. Thankfully it changed over the years to add some much-needed additional services. Currently, over 60 million beneficiaries are enrolled in the Medicare program. Enrollment is expected to rise to 79 million by 2030. While Part A and Part B will provide coverage for the majority of your expenses, there are federally regulated Medicare supplemental policies that you can purchase to help fill in the gaps that aren’t covered in-full by Original Medicare.
The Different Parts of Medicare
What is Medicare Part A?
Part A will assist you with the cost of inpatient hospital care and skilled nursing facility stays. It also helps with things like hospice and home health care. In general, you should think of the inpatient hospital benefit as coverage for room and board in the hospital.
It covers the cost of your semi-private room. Part A does NOT cover many of the actual treatments that might occur, such as scans or surgeries. Those fall under Part B.
For most people, the cost at age 65 is $0. Why is that? During your working years you paid taxes to pre-fund the premiums for your hospital benefits. If you don’t automatically qualify for premium-free coverage, most individuals can still apply for it. We cover the current cost of Part A for those individuals in our full article on Medicare Part A.
What is Medicare Part B?
Part B is your outpatient medical coverage. It covers essentially all of your other coverage outside of your inpatient hospital fees. Part B, covers things like doctor’s visits (including doctors who treat you in the hospital), lab work, preventive services, and surgeries. More importantly, Part B covers cancer therapy and kidney dialysis. These are extremely expensive items that will cost a fortune without supplemental coverage.
The cost of Part B is set by Social Security and it changes from year to year. Generally speaking, individuals in higher income brackets pay more than those in lower incomes brackets. How much you pay is determined by your adjusted gross income reported to the IRS in recent years.
You can read more about the cost of Part B on our Medicare Cost page.
What is Medicare Part C?
Why don’t you have to enroll in Part C with Social Security like you do with A & B? We also call Part C, the Medicare Advantage program. The cost of Advantage plans will vary by carrier, county of residence, and plan selected.
To enroll in a Part C plan, you must enroll in both Parts A and B. Likewise, you must also live in the plan service area. Once you enroll, your coverage will come from the Advantage plan itself, not from the government. If you enroll in a Part C plan with a low or $0 premium, PLEASE make sure you still pay your Part B premium.
Part C is voluntary. When you select Part C, your coverage will come from the carrier plan and not from the government. Many people prefer to get their Medicare coverage from Original Medicare and traditional Medigap plans. If you do not want a Part C Medicare Advantage plan, you will simply not enroll in one. It is your choice whether you wish to opt for one as opposed to just staying with your original Medicare A & B and enrolling in Medigap. Our team will educate you on the pros and cons to help you make a decision that best meets your needs and lifestyle.
What is Medicare Part D?
Part D is the newest part of our national health insurance program for people age 65 & up. For half a century, there was no Medicare coverage for prescription medications. Part D was originally proposed by President Bill Clinton in 1999. A few years later, it was brought back up by both political parties, both Houses of Congress and President Bush. The final bill is enacted as part of the Medicare Modernization Act of 2003 (which also made changes to the public Part C Medicare health plan program) and went into effect on January 1, 2006. In 2020, 46 million of the more than 60 million people covered by Medicare are enrolled in Part D plans. Many people refer to their Part D plan as their “drug card”.
It covers retail prescription drugs that you pick up yourself at the pharmacy or order via mail order. During your Initial Enrollment Period or during the Annual Enrollment Period, you can select the best carrier prescription drug plan that is cost effective and covers the medications you are taking. The best way to determine which plan is the right fit for you is to have your agent run a Part D analysis using Medicare’s prescription drug finder tool.
What doesn’t Medicare cover?
Again, Medicare isn’t free and Medicare doesn’t pay for everything.
Medicare does not cover:
- Long-term care
- Hearing aids
- Routine dental care
- Routine vision care
- Medical care outside of the U.S.
- Dentures
- Plastic and/or cosmetic surgery
- Massage therapy
Click here to watch our Medicare video series.
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